by Derek Singleton
ERP Analyst, Software Advice
May 10, 2012

There are more than 220 software solutions to address all aspects of manufacturing, from product inception to customer delivery. We’ve written this buyer’s guide to assist manufacturer buyers to learn about this complex market.

Here’s what we’ll cover:

What is Manufacturing Software?
Application Categories
What Type of Buyer Are You?

Market Forces & Trends
Recent News
Benefits & Potential Issues

What is Manufacturing Software?

Software for manufacturers tracks manufacturers’ suppliers, costs and customers. It assists with the planning and execution for manufacturing projects. It covers the gamut of ERP - from accounting systems that track the accounts for international giants to the manufacturing resource planning software systems that your local metal shop uses. There are packages to forecast resource consumption, track inventory and sub-assemblies, and run a shop floor as smoothly as fine-tuned machine that it produces.

Application Categories

What Type of Buyer Are You?

Before evaluating any systems, you’ll need to determine what type of buyer you are. Over 90% of buyers fall into one of these three groups:

• Enterprise resource planning suite buyer. These buyers value the seamless integration of data and processes that comes from having one ERP software system for all functions. For example, a full-suite system for estimating, work-in-progress management and accounting that can automatically turn an estimate into a budget for project management, and then match invoices to project status and allocate job costs. These buyers favor complete suites like SAP, Sage ERP or Microsoft Dynamics AX.
• Departmental buyer. Specialists in one function, such as fabricators, project managers or finance managers, may value the feature depth of best-of-breed solutions designed for their function. For example, the shop floor may have special fabrication machines which require special control systems that integrate with specific job shop software. Additionally, some organizations will require industry-specific functionality. For this reason, we have created unique guides for aerospace, apparel, chemical, electronics, food and beverage and pharmaceutical manufacturers.
• Small manufacturer. Small organizations often have limited budgets and fewer IT resources to dedicate. In many cases, they may be deciding between a new system and a new piece of equipment. These buyers need cost-effective solutions that are easy to implement and use. Some will prefer full-suite systems, while others may just want one application, such as resource planning or shop floor operations.

Market Trends You Should Understand

Manufacturing is seeing a renaissance with new technologies such as laser cutting and 3D printing. Similarly, manufacturing systems must be evaluated considering the following trends:

• Vendor consolidation. Large vendors like Infor, Oracle, and Microsoft are buying niche vendors to round out solution libraries. With so many vendors and products in this fragmented market, this trend will continue for the foreseeable future.
• Intelligent inventory tagging. The use of one-dimensional bar coding for equipment and inventory tagging is well established in manufacturing systems. Recent systems use radio frequency identification (RFID), which can be read remotely, to check inventory levels and to confirm equipment availability. Other systems use two-dimensional bar codes which contain descriptive information in addition to an identifier like a part number.
• Adoption of cloud technologies. Cloud-based systems are still the exception rather than the rule. However, more and more manufacturers are subscribing to software as a service (SaaS). Using SaaS reduces the maintenance costs in computer infrastructure. It also frees up capital to invest in shop equipment and other infrastructure.
• Use of mobile devices. Until recently, most inventory system designers assumed that users would be working from a fixed location. There were small mobile devices used for inventory control and parts identification, but most information had to be either remembered or written down and then brought to the computer. The new trend is to have completely mobile workstations using a wireless network in the warehouse or on the shop floor. Operators enter pertinent information directly into the mobile systems without having to go to a permanent workstation.

Recent News

• Kenandy - Kenandy, the first manufacturing business software built on Salesforce’s Force.com platform, announced an update on May 3, 2012. The update expanded Kenandy’s functionality to include integrated financials and order management capabilities. Previously, Kenandy offered only core manufacturing management software such as materials planning and inventory control. By adding financials (e.g. expense reporting and job costing) and order management, Kenandy allows manufacturers to manage their entire operation--from customer management to order fulfillment--from a single system.
• Fishbowl - Fishbowl also made a recent update to their software for manufacturing to make it easier for manufacturers to operate within one manufacturing software solution. On February 7, 2012, Fishbowl released their first customer relationship management (CRM) offering, Pipeline Contact Manager. Pipeline Contact Manager is a web-based CRM offering that integrates with their small business manufacturing software. With the program, manufacturers can use Fishbowl to track leads and sales opportunities as well as maintain existing customer relationships.
• Microsoft Dynamics AX - Microsoft released Dynamics AX 2012, one of their most popular manufacturing ERP systems, at their Microsoft Convergence event in 2011. The release featured several improvements such as enhanced business intelligence, visual kanban functionality and an updated product configurator. The kanban functionality is particularly useful for firms that have a focus on lean manufacturing principles. Manufacturers can set kanban rules to help the plant better manage inventory by tracking supplier lead and replenishment times graphically.

Benefits & Potential Issues

Manufactures need a strong return on investment, and a good system can provide hard dollar efficiencies. However, there are additional benefits to be gained as well.

• Better planning and resource allocation. One of the greatest benefits of software is better data and greater insight into the actual money costs of inventory, people, and equipment, and the actual time costs for each step of the planning and production process. 
• Greener operations. Better planning and tracking leads to operations that generate less waste and less scrap, reducing environmental impact for those firms. Additionally, as more documentation is kept electronically, it reduces waste paper and cuts paper costs.
• Support for lean manufacturing. Better planning, better resource allocation and reduced waste are all goals of lean manufacturing disciplines. 
• Producing compliance documentation. Many manufacturers are subject to strict compliance regulations because of the materials they use, the products they manufacture, or the raw materials they consume. Software can generate much of the required documentation as a consequence of ordering and receiving materials and equipment. 

For all of the benefits of a manufacturing ERP system, there are drawbacks as well. Ideally, the way to go about implementation is to decide on a set of business processes and then select programs to implement those processes. The reality is generally the system is selected and the business processes reflect the functionality. The danger is that certain decisions, for example procurement options which can reduce prices, are difficult to implement because “The software won’t let me.” This is called being “process bound.”

The open nature of manufacturing floors and warehouses hinders the use of wired networks. The electromagnetic interference from shop equipment makes for a challenging environment for wireless networks. Overcoming these issues requires a significant investment in hardware. Therefore, the choice to select premises-based systems versus cloud-based is not as clear cut, since the supporting network is expensive in either case.

Have an opinion on this guide? Email the author. We appreciate the feedback.